Verizon's third-quarter earnings looked pretty solid. On the wireless business, they added postpaid phone customers at a solid clip, saw a nice increase in revenue per customer, and also a nice uptick in wireless margins. We think that reflects the strength of the Verizon business and the fact that management's focused most of their attention on wireless. It's by far the most important segment for the company.
On the flip side, AT&T, they've diversified their business quite a bit across a number of different segments. AT&T's wireless business looked OK. They did add wireless postpaid phone customers, which is a good achievement for the company, but they're not seeing the same improvement in margins and the same margin growth that Verizon is seeing. And some of that, I think, speaks to the relative positioning of the two companies and the pricing power that Verizon has versus AT&T in the minds of customers today.
The one area where AT&T is doing really well in the wireless business is on the prepaid side, which is an area where Verizon traditionally hasn't focused as much, again, because it focuses its attention on the higher end of the market where its superior network quality really comes into play.
But with AT&T, the big concern with this quarter was just the complexity of the firm's reporting, that with the acquisition of DirecTV a couple of years ago, with the acquisition of Time Warner here this year, the firm's reporting has gotten extremely complex and parsing out the numbers has become a challenge. AT&T, I think, is doing investors a bit of a disservice by trying to carve out this advertising segment to demonstrate the success of the effort to bring all of these various pieces together to advertise in new ways to consumers, but what that does is add a lot of accounting complexity that makes it harder to follow the numbers.
That's especially concerning in the entertainment segment, which I think is an area where investors have focused a lot of attention over the last several quarters. The entertainment segment includes the consumer fixed line business, which is primarily Internet access and the old DirecTV satellite television business, where we've seen revenue growth really stall as customers start to abandon the traditional linear television model and move to over-the-top or Internet-based products. That's really hurt revenue in that entertainment segment. And on top of that, there's been significant margin compression in the entertainment segment, and that, I think, has really caught investors' attention because AT&T did spend pretty aggressively to acquire DirecTV a couple of years ago. They put a big chunk of invested capital behind that business, and now it's really struggling to grow at all and it's struggling to maintain margins, which is a big concern as this evolution to new video distribution models takes hold.
I think that's where investors are focusing their attention on AT&T, some of the weaker spots in the quarter, in addition to just trying to get through the numbers, which are extremely complex, and then tying that all back to the balance sheet and to cash flow, where I think investors have some concern that AT&T isn't going to be able to reduce leverage as quickly as management hopes.